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Lebanese bank denies U.S. charge of money laundering

By Tim Lister, CNN
Stuart Levey said any bank involved in illicit conduct on this scale "risks losing its access to the United States."
Stuart Levey said any bank involved in illicit conduct on this scale "risks losing its access to the United States."
  • Treasury says bank launders money for drug dealer, has ties to Hezbollah
  • Bank chairman says bank is not involved in money laundering
  • Treasury says money from South American cocaine shipments laundered by bank
  • Lebanon
  • Canada

Beirut, Lebanon (CNN) -- A Lebanese bank has denied accusations by the U.S. Treasury Department that it is involved in laundering hundreds of millions of dollars on behalf of a drug kingpin -- and rejected claims it has links with Hezbollah, the Lebanon-based militia.

On Thursday the Treasury described the Lebanese Canadian Bank in Beirut as a "financial institution of primary money laundering concern." The Treasury said it had reason to believe that managers at the bank were complicit in money laundering by Ayman Joumaa, an alleged trafficker accused by U.S. authorities of shipping drugs from South America to Europe and the Middle East through west Africa.

The Treasury also said its action in designating the Lebanese Canadian Bank (LCB) exposed links between the bank and Hezbollah -- which is listed as a terrorist organization by the United States. Designation means that U.S. persons are prohibited from conducting financial or commercial transactions with individuals listed, whose assets under U.S. jurisdiction are frozen.

U.S. Under Secretary for Terrorism and Financial Intelligence Stuart Levey said: "Any financial institution that collaborates in illicit conduct on this scale risks losing its access to the United States."

The bank's chairman, Georges Zard Abou Jaoude, told CNN Friday that the bank had no relationship whatsoever with Hezbollah nor to the best of its knowledge with anyone designated by the U.S. Treasury Department. Jaoude said the bank had identified an account in Joumaa's name but it had not been used in four years. It had notified Lebanese regulators about the account, and the bank's books had been regularly inspected by the Special Investigation Commission, a Lebanese task force set up to counter money laundering.

The Treasury said Joumaa's network "launders hundreds of millions of dollars monthly through accounts held at LCB, as well as through trade-based money laundering involving consumer goods throughout the world." In its statement issued Thursday, the Treasury estimated that as much as $200 million was being laundered on a monthly basis. "At least one of the individuals involved in this global drug trafficking and money laundering network has worked directly with LCB managers to conduct his transactions," the Treasury said.

The U.S. Drug Enforcement Administration, which was also involved in the investigation, said: "The Lebanese Canadian Bank for years has participated in a sophisticated money laundering scheme involving used cars purchased in the United States and consumer goods overseas."

The Treasury said the bank's links to Hezbollah included a subsidiary in Gambia called Prime Bank, formed in 2009, which it said was "partially owned by a Lebanese individual known to be a supporter of Hezbollah. "

Jaoude told CNN the bank rigorously adhered to all blacklists published by financial authorities around the world. He said the bank had not been contacted in advance by the U.S. Treasury's Office of Foreign Assets Control before Thursday's announcement and he was urgently trying to contact U.S. authorities. "All our books are open to the American Treasury," Jaoude said. "We have to clear our name," he said.

In its most recent annual report, the bank said "it is fighting money laundering by complying with international and [Lebanese] Central Bank circulars."

The Lebanese Canadian bank has 35 branches in Lebanon, as well as its subsidiary in Gambia and an office in Canada. The bank has grown quickly in recent years, from assets of $2.83 billion in 2005 to $5.18 billion in 2009.

Ayman Joumaa was designated in January -- along with nine individuals and 19 entities connected to his drug trafficking and money laundering. A Treasury statement said he "coordinated the transportation, distribution, and sale of multi-ton shipments of cocaine from South America and has laundered the proceeds from the sale of cocaine in Europe and the Middle East, according to investigations led by the Drug Enforcement Administration." Joumaa's whereabouts are unknown. He is believed to hold Lebanese and Colombian passports.

One of the entities designated along with Joumaa was a company that runs a used car business in Benin and Congo out of southern Lebanon. Its manager, Iman Kharoubi, told Lebanon's Daily Star last month: "We work in Lebanon and Congo and Benin in Africa. But we do not know who Ayman Joumaa is; we don't have anything to do with him." CNN's attempts to reach Kharoubi were unsuccessful.

For several years, U.S. authorities have alleged that Hezbollah is profiting from drug trafficking from South America to Europe via west Africa. In June 2008, the U.S. Treasury Department designated two Venezuelans of Lebanese descent as Hezbollah financiers and supporters.